The big question of the Dillard's condemnation hearings has been "How much is the Twin Peaks store worth?" But on Thursday, a second question gained equal prominence: "How did you get that number?"

The appraisers took the stand Thursday, trying to lay out how the same property can be valued at $6.3 million by Dillard's and $3.03 million by the Longmont Urban Renewal Authority. LURA has filed to condemn the property so that an $80 million Twin Peaks Mall redevelopment can go ahead.

Neither side is allowed to include the effects of the mall project -- positive or negative -- in its Dillard's estimates.

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(Times-Call file photo )

Larry Stark, president of National Valuation Consultants, said he was trying to filter out both that affect and the recent economic ups and downs in reaching his figure for Dillard's. To do that, he said, he limited himself to recent sales comparisons -- no more than two or three years -- involving businesses of a similar size, type and setting. In a separate analysis, he compared lease properties to see what kind of income an investor could expect from the property.

Both methods, he said, independently brought him to the $6.3 million figure. If anything, Stark said, his estimates may be conservative. His first group of sales comparisons, for example, were often in the $80 per square foot range; Stark assigned a value of $67 per square foot. Likewise, his income estimate of $6 per square foot split the difference of a range he set between $5.28 and $7.

LURA's attorneys pointed out that most of his valuations were from outside Colorado and none were attached to regional malls. Of the initial eight comparisons, four involved Kohl's sales, which LURA appraiser Harold McCloud said didn't make sense with a Kohl's already across the street.

"Going down their list of retailers ... I can't come up with one that is not already in the market area," said McCloud, who set the $3.03 million. Testimony on his own methods will continue Friday, but among the factors taken into account by McCloud were the market of the mall area, and the physical surroundings -- including, he said, the fact that the nearby mall nearly blocked Dillard's from sight to passing traffic.

"As far as I can see, there's basically no visibility to this property," he said.

Stark said that with a "destination" site like Dillard's that people would seek out, immediate visibility didn't matter as much. The fact that Kohl's was already in the neighborhood, he said, helped show the area was attractive to that sort of national retailer.

"It's not unusual to have less visibility," he said. "What we have is great access."

Plans to redevelop the Twin Peaks Mall have been discussed since at least 2007, when the then-owner, Panattoni, asked for a blight study to be done at the mall. A blight designation allows cities to declare an urban renewal district and take action to improve the area.

Dillard's owns its own store and holds a deal with the mall -- now owned by NewMark Merrill Mountain States -- requiring the store's approval on any redevelopment plans. When negotiations fell through, LURA filed a condemnation to try to claim the store's title.

A court-appointed commission will set a preliminary price after the hearings so that the title can be transferred to LURA.

LURA attorney Robert Duncan was interested in a pair of 2007 valuations Stark had done for the mall's pre-Panattoni owner, CBL & Associates. Duncan quoted repeatedly from comments the studies made about the mall's poor condition -- comments that Stark said were taken out of context -- and stated that one valuation found that Twin Peaks' "highest and best use" was to restock its tenants, while an earlier one recommended cleaning the slate.

"On page 3 of your July appraisal, you said the highest and best use is to demolish most or all of the existing mall and redevelop the site according to modern retail standards," Duncan said.

Stark explained that in the first study, the owners had been explicitly interested in at least a partial rebuild and had removed "re-tenanting" as an option. That was not the case in the second study, he said, where CBL considered pursuing new tenant leases just before deciding to sell to Panattoni.

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